After weeks of preparation and measures of financial support being offered, the energy price cap rise comes into effect from today (Friday, April 1), with it rising by 54%.

It means energy prices will rise by £693 a year for millions of households after regulator Ofgem hiked the price cap on bills to £1,971.

The energy regulator is responsible for the energy price cap which limits how much providers can charge customers on their energy bills.

This increase follows a 12% rise in October and will take effect this week, and is one of many financial pressures facing households as the cost-of-living crisis continues.

People might still have questions on how exactly the price cap works now that it has come into effect.

Bournemouth Echo: Energy bills are set to rise by £693 a year for many households (PA)Energy bills are set to rise by £693 a year for many households (PA) (Image: PA)

How the energy price cap works

As stated by the Money Saving Expert website: "The price cap sets a limit on the maximum amount suppliers can charge for each unit of gas and electricity you use, and sets a maximum daily standing charge (what you pay to have your home connected to the grid)."

This means that there is no upper limit to what a household would pay, as if you use more energy you pay more, and if you use less energy you pay less.

As the MSE website states: "It only applies to providers' standard and default tariffs, so if you're on a fixed-term energy deal, the cap doesn't apply. If you've not switched in the last year or so, it's likely you're on a capped tariff."